Expanding Affordable Housing

Expanding Affordable Housing

Businesses must join with nonprofits and the public sector to tackle worker housing shortages.

Housing is considered “affordable” when it requires no more than 30 to 40 percent of a family’s monthly income, or when the sum of housing plus transportation expenses eat up less than 45 percent.

About 34 percent of Twin Cities residents are “cost-burdened” with respect to their housing and transportation costs, according to Minnesota Compass. The burden falls most heavily on low-income workers, including many who provide essential services in health care, food service and administrative support roles. To make matters worse, the cost of renting in the Twin Cities is going up, while wages for many are stagnant or falling. The Metropolitan Council reports that only 6 percent of the new housing built in 2013 was affordable, based on a family earning 60 percent of average median income; compare that to 29 percent in 2012.

“Nonprofits are trying new solutions to what is now a crisis in affordable housing,” says Eric Muschler, a program officer with the McKnight Foundation. He points to several nonprofits that are making a difference and emphasizes that creativity and fresh thinking are needed. “We realize we can’t spend our way out of the affordable housing problem, so we need to work differently,” Muschler says.

McKnight is playing a catalytic role, working to help business, government and nonprofit partners to leverage new and different sources of capital for affordable housing. They want to create and sustain housing infrastructure that will support workers at all income levels.

Ellen Sahli, president of the Family Housing Fund (FHF), one of McKnight’s key partners, describes a fundamental shift in the work of affordable housing advocates since the recession. “Coming out of the foreclosure crisis we realized there truly is not enough affordable housing, and the gap is widening,” Sahli says. Factors include a growing economy that puts pressure on existing units, heightened interest among young adults in rentals vs. home ownership, and developers’ focus on luxury and downtown properties that appeal to higher-wage workers.

FHF is seeking solutions that can be customized and applicable across many localities. In one example, FHF created a data-driven calculator that local units of government can use when they are in the early stages of planning a housing project. The calculator allows staff and developers to enter their proposed development parameters, define costs associated with a specific development based on geography, and then determine whether mixed-income housing can be feasible while still delivering a return on the investment. (Check it out at mncalculator.inclusionary.net.)

Chad Schwitters, executive director of Urban Homeworks, speaks of the “redemptive development of real estate” to benefit individual lives and communities. Urban Homeworks (UH), a McKnight grantee, has experienced a sea change in the work that’s needed to respond to the region’s tremendous gap in affordable housing. “What’s really different is that 20 or 30 years ago there was more of a social contract for businesses that generate wealth to reinvest in people and places that were economically challenged and left behind. That social contract is not completely broken, but it is almost severed,” he says.

“Part of how we are viewing the current environment is that this is not a scarcity of resources issue,” Schwitters says. “This is a lack of will. We must figure out how to change and increase the will of the population, our elected officials, and people of faith to effect change.” UH does this by supporting the people whose housing is stabilized so they can “stand up and have their voices heard.”

UH has organized a council to foster “people-oriented development.” Members of the council learn how to become leaders through participation on the UH board of directors, neighborhood organizations like the Northside Achievement Zone, city housing committees and neighborhood boards, and UH’s “Let’s Talk” series with elected officials. People who have benefitted from housing stability can then tell stories of how stable housing has made a difference in their ability to work, parent and volunteer.

As a region, Schwitters says, we are paying an incredibly inefficient and high price, through taxation, levies and other expenses, to put a Band-Aid on the symptoms without treating the disease—lack of adequate housing. “We’re muddling around, rather than diagnosing and solving the deeper disease,” he says. “And the deeper disease has a really great return on investment if we invest in stable housing for people in the first place, rather than in symptoms that result from lack of housing. If you look at this with a regional lens, there is a strong business case for solving this problem—for taxpayers, for residents, and for businesses.”

All signs point to the need for greater private sector involvement and leadership, whether as real estate owners and developers, employers or taxpayers. Just as many businesses are experiencing the area’s long-predicted shortage of workers for their growing enterprises, so too are businesses affected by the challenges employees face when they are squeezed out of a shrinking affordable housing market. Together we can make a difference on this important front. Companies can get involved in a solution now, or pay for the symptoms for generations to come

Sarah Lutman is a St. Paul-based independent consultant and writer for clients in the cultural, media and philanthropic sectors.

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